Driving Cash Flow Through: Gross Margin!
There are only two ways to improve your Gross Margin (and thereby increase cash flow): Increase prices and decrease costs. Let’s take a quick look at both of these options.
Increase Pricing:
A solid market analysis is an especially useful thing when determining appropriate pricing. Conduct a market analysis every few years – more often if your industry or market is in flux.
You should also consider your place within the industry. Are you the low-cost provider (thereby quality and service are secondary) or the luxury brand? A market analysis will give you a better picture of where you fit along the spectrum and help you determine whether there is wiggle room in your pricing.
Decrease Expenses:
The other way to increase gross margin: Lower your costs — wisely!
If you are a service firm and your largest expense is payroll, there may not be a way to decrease your cost of sales without sacrificing the quality, service, and goodwill of your current employees.
If you are a manufacturer, the options are more diverse. You can pay your labor differently. You can buy material differently. You can re-engineer the product, so it uses less material or standardized components.
Want help with market analysis? It’s just one of our many accounting services. We are just a phone call away.
Related Reading:
Don’t stop here. Be sure to check out some of our other accounting resources.
Learn More About How OWL Can Help You
Bookkeeping
Whether you need help with accounts payable, payroll or your monthly close, our accountants ensure these critical tasks are completed accurately and on time.
Accounting
When your books are up to date, you can respond to opportunities and challenges quickly. Accurate, bank-ready financials allow you to make better decisions for your company.
Financial Planning
Gain access to powerful insight typically only available to companies that employ a full-time controller or CFO. Leverage their expertise when you need it, without adding to your payroll.
Freedom to Focus on Your Business
Our Partner Organizations →
Get the Full View of Your Business Financials
Just like an owl can turn their head 270 degrees to see the whole landscape, Owl Bookkeeping and CFO Services can help you see your full financial picture.
Call us today: (612) 816-6007
